永利渡假村 (WYNN) 2011 Q1 法說會逐字稿

Good afternoon and welcome to the Wynn Resorts first-quarter 2011 earnings call.

Joining the call on behalf of the Company today are Steve Wynn, Marc Schorr, Matt Maddox, Marilyn Spiegel, Scott Peterson, and on the phone, Ian Coughlan, President of Wynn Macau; and Robert Gansmo, CFO of Wynn Macau.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Thank you.

I would now like to turn the call over to Mr.

Maddox.

Please go ahead, sir.

Thank you and good afternoon, everyone.

Before we get started, I need to remind everybody that we will be making forward-looking statements under the Safe Harbor federal securities laws and those statements may or may not come true.

So with that, I'm going to turn it over to Steve for the introduction.

Well, I think everybody has seen the numbers.

They were very nice.

As is the case from time to time, the casino gets a little lucky and that was the case this year during Chinese New Year in Las Vegas.

But it was gratifying, and so it resulted in a 120% increase in earnings.

But stripped of that sort of thing and normalizing the percentage that the casino produces, we still had very nice increases in our RevPar, our average daily rate and our revenues in non-casino area and activity in the casino.

Business in Las Vegas has improved which is a trend that we saw last year at the end of the year and we raised our rates and had no problem.

We also are enjoying the benefits of having invested a couple hundred million dollars in Las Vegas, half of which went to remodel all of the rooms in our hotel which opened in April of -- exactly six years ago.

We started it at the end of five years because that's what we do here.

We take care of the property and we upgraded it while we remodeled it.

That was another reason why we get higher rates and we will be able to get higher rates going forward.

We continue to press ahead with increases which will continue in the next quarter.

We also spent a great deal of money.

We built the Beach Club, the Encore Beach Club, we built Surrender, another nightclub.

We remodeled Baccarat.

Altogether we put a new motor entrance in our villas, a lot of things make the place even more user-friendly and more fun for people.

We benefited from having a strong capital structure which allowed us to do these things.

And contrary to some of the things you see on television, we brought money from China and invested it here in this particular case and it worked out very well for us.

It was also terrific for us to notice yesterday was the 108th day of the calendar year 2011.

And it was on the 108th day that we passed the $0.5 billion mark in EBITDA.

We're at $503 million in 108 days which is a really wonderful clip.

It would put us -- if that were to continue, it would put us enormously ahead of last year.

The increase in Macau was 50%, the increase in Las Vegas was 120%.

As usual during these conference calls, I tend to see if that was entirely anomalous or whether the trend sort of continues.

And it appears to be doing it because in April -- and of course it's only 18 days -- we're about 160% ahead in Las Vegas and about 100-odd percent -- over 100% at Macau.

We want to point out that up until now and continuing until the 21st of April, the Macau numbers are comparing Encore at Wynn Macau for total of 1,000 rooms to just Wynn -- Encore in Macau opened up on April 21st, so we get our first year-to-year comparisons where the facilities are equal starting in the last week of April and of course, all of May and thereafter.

So, we are benefiting from the fact that our hotel is larger compared to its size last year, and that is going to last for another three or four days, and then we are up against an equal facility.

And I think if anybody's looking at our numbers, they should keep that in mind.

I think that sort of summarizes, unless Matt thinks we ought to add anything to our opening comments.

But business for us is terrific.

We are at the top end of the market and that is a good place to be under the circumstances.

Everybody is here with me today, I think the operator mentioned that Marilyn is here and Ian is in Macau.

Matt and I and Mark are here, everybody; Scott.

We are all available to discuss the implications of our numbers with whomever is now ready to ask.

(Operator Instructions) Joe Greff, JPMorgan.

Steve, looking backwards at the first quarter and so far in April in Las Vegas, normalizing that the Baccarat hold, what do you think is driving your increases in RevPar of the non-gaming spend?

How much of it do you think is property specific?

And maybe, Marilyn, you can maybe chime in on some of the things you might be doing differently.

How much of it is the market itself just getting better?

And then I have a follow-up on Macau.

It's a question for Marilyn Spiegel.

I think, Marilyn, I think you could address that.

Actually, I don't see the market getting much better from the January/February numbers that LDCDA announced.

But we certainly have seen a different trend in terms of finding customers who not only want to stay here and they want to eat here and they want to visit our retail stores and our showroom, and so we have been very focused on all of our hotel channels, how we think about our revenue management system, how we are thinking about our website, and we are trying to bring in a guest who is willing to pay for the amenities that we offer.

And part of our strategy has been to have confidence in this market.

So rather than moving to where many of the competitors have, we've really tried to stay above the fray and our customer base is finding us and enjoying our service and our products.

Great, thank you.

And on Macau, I know you have added some new junkets there recently.

How much of that contributes to the first quarter?

I think most of that hit the very tail end of the first quarter.

And further to that topic, is there much in the way of taking relatively underutilized tables whether premium (inaudible) or maybe improving the junket business where you think you can get a better yield with additional junket business in Macau?

Is there much left to improve the yield on the table side of Macau I guess is my general question.

It's Marc Schorr.

In VIP in Macau were 243 VIP games this quarter, first quarter 2011, versus 196 in first quarter of 2010.

So we increased our VIP market share by increasing our table games.

Obviously, we took the games from the general casino and moved them into the more profitable market for us.

But sales in Macau, retail sales and other (inaudible) of non-casino play are also sharply up (multiple speakers)

37%.

Yes, 37%, 40%, sharply up (multiple speakers)

Food and beverage.

Food and beverage was 43%.

I mean, our facilities in Macau are very well received as are some of our competitors as well.

But we are enjoying that.

Of course you know, our -- the most important number to remember in gaming, I have said this before.

For those of you who really follow this, don't look at market share per se, look at fair share.

We use that term.

You can call it what you want.

But you basically take how many units of slot machines or tables does a given operator have compared to the total in the marketplace.

And then take a look as at the share of the money that the person -- that the company has.

If that ratio is better than 1 to 1, then you are a net receiver of the customers and you have sort of made a dorm out of your neighbor.

If it is less than 1 to 1, then you are a donor to your neighbor and that is a negative fair share.

We have been able to increase our fair share market penetration in the face of increased competition.

It happened to us in Atlantic City years ago.

We were the smallest place but the more places came on, the more our premium over the average increased, and we are enjoying that again in Macau.

It is a very important number and it sort of tells you how good a job you are in delivering a good guest experience, a good customer experience that makes those people want to come back again and again and keep you as their favorite place.

That is the number that I watch very carefully and then Matt and Marc, we are on that all the time.

And that's what has happened to us in China.

And also a tremendous increase in our slot operation in China.

Our product mix has been very well accepted by the patron in China.

It is our slot per win is more than up 78%.

So is our general casino win per unit.

We just get a different kind of customer really and that's what happens.

This is Ian in Macau.

We continue to tweak and massage our table and slot layout on the main floor.

We're watching VIP productivity very carefully.

We are making changes constantly to get a better yield and higher productivity.

And just some very quick numbers.

We've got 10% of the table games in the marketplace, we have 14% of the marketshare and on slots, we have got 8% of the slots in the marketplace in the first quarter and we have got 22% of the market captured.

Ian has just highlighted our agility or what we hope is our agility in that fair share ratio.

That's what he watches with Linda and that's what Marilyn watches here with Scott Peterson and Marc.

That's really -- that's our whole focus.

You know, it comes down to one thing, all the rest is baloney -- guest experience, if the guest experience is good, everything is sweet and lovely.

If it's not, problems, which is again why your capital structure is so incredibly important in our business so you can protect your employee base and your facilities and the way we present it.

I think we can take another question now.

Shaun Kelley, Bank of America.

Just -- my question is probably mostly for Matt.

But just glancing on the balance sheet side of things, it looks like you ended the quarter at about $1.8 billion of net debt.

Kind of looking on a run rate basis, that's going to put you guys probably low turn and a half of kind of net leverage.

So could you just help us think a little bit more strategically about how you guys are thinking about the balance sheet opportunity?

Maybe first off what is the right optimal capital structure for the business?

Is there some opportunity to maybe tap into the debt markets at some point here just given how much cash you guys are generating at this point?

So, we will always maintain a very conservative balance sheet as you know, Shaun.

We did change our capital structure around a little bit this time.

We increased our dividend from $0.25 per quarter to $0.50 per quarter.

We did that yesterday.

That's right, it came out today.

So that was announced today, and so we are returning more capital to shareholders, but we are still a growth company.

We have Cotai on the horizon, we have other projects that we are looking into.

So we are going to keep our powder dry and make sure that we are not building out this Company with a lot of leverage.

We are doing it with a lot of cash flow which is the best way to grow the business.

Go ahead, I'm sorry.

Sorry, and, Matt, just on that with the cash flow sitting over kind of in Macau but you guys obviously -- the bulk of it coming from over there right now, would there be any strategic interest at all about considering maybe looking at starting to buy back shares in the subsidiary over there?

Shaun, I really don't want to get into the strategic interest of how we are going to deploy our capital, but we are going to continue to be very conservative and make sure that our growth is fully funded and we are not highly dependent on the fragile capital markets.

Everything is opportunistic.

And I think Matt's point is that you could take full advantage of opportunities as they present themselves if you have a strong capital position.

We do, we are watching, we pay attention, we know when to buy our stock, we know when to sell our stock from the Company's point of view.

I don't think we have ever really gotten titillated by an acquisition.

Our experience has been that if we don't build them ourselves, they are not as good as they need to be in today's marketplace.

And I don't mean in any way to be deprecating my former practice hotels, but we try and get better with each one and be more user-friendly with each one and more importantly, make each hotel more convenient for the staff because at the end of the day, it is our employees that touch the customers, it is our employees that make the guest experience, not the people on this call.

We create an environment where the employees can do it and that's one of the reasons why we are politically concerned.

Because if the living standard of our employees are dropping because of the fiscal policy of the government, we can't keep up with salary increases to protect people on fixed income from the damage that they are suffering at the hands of this deficit.

So this and gas prices, they worry us going into the summer, the living standard in America is being rapidly and critically eroded and we recognize that as a factor in our future as we look at our growth and our opportunity.

Next question?

Rachel Rothman, SIG.

Can you talk a little bit about maybe, Marilyn, some of the cost cutting programs that you have been implementing at Wynn or what you have done to drive the margin expansion that we have seen even excluding the whole benefit in the quarter?

Actually, I wouldn't describe it so much as a cost-cutting program as one that is driven by revenue growth.

That's why the margins came in so strong.

We look at every expense, obviously.

We look at payroll, we looked at our fixed expenses.

They are very stable.

More critically though, we have increases in variable expenses because our gaming revenues were higher.

There's a few things that we have done to enhance the guest experience.

Steve talked about it on our last call where we're going to have a Discover Wynn call center such that anyone who calls us for a reservation will also be able to book their restaurant reservations, their show reservations, their spa, everything, one-stop shopping because we really think that when a guest comes here, we could serve them for all their needs.

And so that has been important to us and we are going to move into that new call center in mid-May.

But besides that, we have looked at how our labor was deployed before, making sure that it is smart before we add a position.

We determine if there is someone who could be -- their responsibilities changed a bit.

But I don't think that we really had cost-cutting as a focus here.

So as we think about the sequential progression in the margin or the opportunity for continued margin gains ex the whole benefit throughout the year, how should we frame that?

Once you get a business operating in terms of its staffing and other controls at a proper level, then you have leaned out that company, that enterprise to the point where you are not wasting money.

The next dollar that you cut after that, you are compromising the enterprise -- delivery of its service and its long-term performance.

Growth comes from money, from revenue.

It doesn't come from cost cutting.

Cost cutting is only good for avoiding waste.

But once we get to that number, the kind of businesses we run, we don't go any further with that.

That's why capital structure is important again.

I keep seeming to be going back to those two words.

But we don't worry about seeing how much we can cut.

That's for people who run a different kind of business than us.

This is not Wal-Mart here.

This is a place where people expect more, they pay more and they get it.

So our focus is on revenue.

I'm done with what I had to say.

Next question?

Mark Strawn, Morgan Stanley.

One question on the land concession in Macau.

Are there any updates there in terms of when that could be signed.

And is there any -- is this tied up in terms of a coordinated plan by the government to issue the confession with others in the market who may be looking to Cotai or is it just something that will happen when it happens?

I think both of your comments are appropriate.

Things move in Macau at a speed that is comfortable for that government.

What we do is we comply with the procedures that are involved, and then the government issues its permissions or publishes in the Gazette or does whatever it does in due course, and there is an awful lot going on in Macau.

And so a lot of this is not -- a lot of -- the administration of the government is not something we're familiar with.

These departments have multiple functions attached to them, and so things move a little bit more slowly than they do when you really want them to speed up.

But the government has published the fact that we are to build on our property.

They have let us fence it in, they even let us build a warehouse on it.

And the actual commencement of construction, which we are ready to do, will take place when the government issues that permission to us, and I'm told that it's any day now.

And those are in conversations as recently as a week or two ago.

You're left with that simple statement and you just wait until they tell and that's how it works over there.

And it may seem -- you know, you get a little anxious, you wish it would go faster.

But it is in the long run a very steady process actually and we are used to it over there.

We spend more time talking about it on these conference calls than we do among ourselves.

And considering what's going on with the products that we operate, it's not like we're under any terrible pressure here.

We are very busy with the drawings and there's an enormous amount of preparation to have complete construction documentation.

Having finished design development and we know what the hotel looks like, we are now in the process of actually doing the reflective ceiling plans, finishing structural drawings fro the foundation which is very complicated in a landfill.

So we make very good use of this time that while we are waiting to begin the remediation of the (inaudible) that's at the -- Cotai remembers a landfill.

So we go down 180 feet before we get to the bottom of the footings with pilings and caissons and such.

I hope that answers your question.

Steve Kent, Goldman Sachs.

A couple of questions.

First on the Cotai project, could you give us any sense as to how much capital that will take?

Second, I did notice -- I thought it was a very good job, that you were able to have your occupancy come down a little bit in Vegas, but your ADR went up quite a bit.

And I'm just wondering if there is -- if you are taking in fact even more of your fair share in Vegas as you described in Macau.

It sounds like you are and maybe you could help us understand that a little bit.

And then third question is mass market in Macau showed a very nice hold for the second quarter in a row and I am wondering if there is anything to that beyond just the normal luck.

It's nice to talk to you Steve.

Let's see.

Cotai.

Cotai.

Marc Schorr.

Las Vegas, we're mixed and hold in Macau.

The hold in Macau is a function.

We tend to do better when the length of play is extended and people linger in our place.

The longer they play, the better it is for us, and they linger in our facilities.

It is a subtle point, it's one that totally occupies my attention in the design development process.

It's something we have always understood and it's one of the reasons why everyplace we have ever operated, starting with the Golden Nugget here in Atlantic City through Mirage, Bellagio, Treasure Island, always held better than our competitors.

So that's the story on the mass market.

The room mix in Las Vegas and Macau (multiple speakers) yes, and our research, we continually sift down and identify the customer we want.

We don't just go and scoop people up at the border.

We are a little bit more selective than that.

I think Marilyn's point was right, is we're more confident now in holding our rate.

So in the first quarter of this year, 20% of our business was through the leisure segment, the lowest end of the segment.

Last year in the first quarter it was 32%.

So we were able to shift a lot of the low-end segment to our casino, to our convention area and to our promotional area which really helped us drive more cash revenue and the higher ADR.

It's a better customer.

So that supports your view that you said about Macau is that you're gaining market share of these higher, higher quality customers in this market?

Yes, we are like Louis Vuitton for lack of a better metaphor.

We are the -- I hope we are the Louis Vuitton of our business and Hermes and Chanel, those kinds of people.

You really have to know your customer and cater to that customer and build facilities and light the light for that customer and pick the texture for that customer.

It is a very meticulous process which is why it takes us so long in design development.

Because every little thing really does matter.

And at the end of the day, it is 90% human resource engineering.

It's our employees that do it, which is why we get so concerned with anything that affects them negatively like gas prices that zoom up.

Even Wal-Mart is more expensive, clothing is more expensive, school is more expensive, shoes are more expensive.

It's all because the dollar is less expensive.

Our currency against troubled euro, a troubled pound has gone backwards in the last nine months between 10 and 18% depending whether you're looking at the pound or the euro.

It's hitting us now.

My employees are complaining about it.

Marilyn gave the rank-and-file of cost-of-living increase how many weeks ago?

When did you do it, Marilyn?

Just last week.

Last week.

We are trying to keep up even though we seem to have crosshairs on our back from the administration.

(multiple speakers) we gave one in Macau, a big cost-of-living increase in Macau because we wanted to combat -- try and combat inflation which is probably a losing game.

Just to finish up, Steve, did you mention the cost of the Cotai project?

I was wondering --

I'm sorry.

Steve, one of the things that happens because we are getting this time to perfect and work on our budgeting is that the better the drawings condition is, the tighter we get in our budgeting.

I started off by thinking, listen, it's okay to spend $2.5 billion or even $3 billion in Cotai, we will make $100 million a month, what difference does it make?

You can talk that way around the office, but when it comes to publishing the budget, we are now at a stage where we are working on interiors and this hotel is filled -- this one in Macau -- with entertainment attractions, non-gaming public entertainment and showroom entertainment and things like that.

It is really by orders of magnitude the best thing we have ever done, physically and operationally.

It is the culmination of 40 years of experience, 44 years experience, so the final number is something -- a really dependable budget is something I hope to have in the next six months, but it will be in that range between $2 billion and $3 billion.

(multiple speakers) 1580 rooms of which 900 are suites (multiple speakers)

Tom Marsico, Marsico Capital.

I was going to ask a question, you just touched upon it with your entertainment attractions.

It looks like there can be some segmentation that would go on in Cotai and Macau.

And I was just wondering what you have learned from the new offerings that have come to the market over the last 12 months, how you perceive those offerings versus what you are looking at at your own hotel there and then also with Cotai as far as new offerings.

Great question and probably the most subtle inquiry that's available in the business from the point of view of management.

I've been doing this for 40-odd years and by far the toughest thing is to nail the entertainment issue on the button; very, very difficult.

Just to think about Macau, think about Atlantic City for a moment.

A lot of repetitive frequent visitation.

The average customer comes several times a month.

So, when -- as opposed to Las Vegas where they come two or three times a year.

In Las Vegas, the size of the turn of customers is such that sustaining shows -- we brought Cirque du Soleil to town with Mystere at Treasure Island.

Then you remember we did the water show O at Bellagio since that time.

And then Franco Dragone did Le Reve for us and we made $25 million a year with Le Reve.

It's a very wonderful thing for us, we have had to invest $130 million in it over a period of years to keep it because we're always changing it and making it better.

But in Macau, a sustaining show is a bit dicier as a proposition because people can't see the same show 15, 20, 30 times.

So we what we prefer to do is to focus on venues that have special event featured entertainment, number one; and number two, to heavily get involved in creative fanciful public entertainment.

Public entertainment; our fountains at Bellagio, volcano at Mirage, pirate ships that sink at Treasure Island, the Lake of Dreams at Wynn, the Tree of Prosperity and the Dragon and the whole changing lobby at Encore and Wynn in Macau.

These kinds of things don't involve a ticket per se but they involve a very strong entertainment experience, many of them costing 40-odd million dollars.

The volcano, the fountains, the pirate ships, they are all $40 million tickets even back in the 80s and 90s.

In Cotai, we are taking the notion of public entertainment, things that you don't have to buy a ticket for, to augment and increase the fantasy quotient of the facility to a whole other level.

The entire hotel is filled with such things.

Restaurants have such things.

The lobby has such things.

This is in addition to showrooms.

The government is very anxious to have Macau have a terrific entertainment profile.

We respond to anything that the government likes there because that's the way to live and be successful in Macau.

So we have taken the notion of in-room box entertainment, you know, like a theater, and we have combined it with public entertainment on a level that we have never ever done before.

And it has been such fun, Tom.

It's taken up the better part of last year to dream up some of this stuff because we are doing things we have never done before, and that means we can't go to the Yellow Pages to find out how to do them.

And Steve Kent wanted to know about the budget and this makes it a little tougher to put your finger right on it until you have got all the bugs worked out.

But this place is going to be an entertainment experience from one end of it to another.

And as I say, Tom, I'm a little concerned about -- I'm not confident I should say about launching a $200 million sustaining production as much as I am confident that having Coco Lee on one weekend and Jet Li on another, having featured entertainment that's -- Coco is going to be married this year to one of our Board members, Bruce Rockowitz, in Macau.

But she is the lady who is the singer and is one of the greatest live performers is in Asia.

Coco was the voice you heard singing in Crouching Tiger, the movie.

She's a big concert act.

Those kinds of things I believe in because you can change them month-to-month.

And that's the direction we're going in, Tom, and you and I have talked about this before.

But we haven't seen anything that has changed our opinion on that.

When you talk about the public entertainment side and the attraction to the attraction -- so, the show that you have at SW is fanciful, is out there, but you don't pay for it, you watch it.

You pay for it in a different way by having another drink or so.

Is that the sort of public entertainment that you are also talking about at Cotai?

So it's a meeting place for people to be?

Because I'm seeing the sophistication of the customer improving in the market.

And you can see it by the type of goods that they are buying.

Maybe they are just buying them because they are expensive, but it seems to me like their taste in a lot of things that are Western, the massive sales that are occurring now at the art galleries and at the auction houses, there's definitely a new sophistication, a new lever level of wealth that has been created in China.

So I think the market has changed dramatically over the last four or five years.

Yes, yes.

Or am I -- are you seeing any of that?

Am I --?

Yes, and --.

Because we are seeing an inflection point is what I'm thinking here.

So when we design restaurants, when we think about making a Japanese restaurant, I will give you an example, we're talking about a Japanese -- it rains there, it's moist air.

The weather is changeable.

So when we talk about creating a Japanese restaurant, we create a Japanese restaurant that is on a Japanese garden and that garden and that restaurant -- the restaurant has no walls.

It's an indoor/outdoor restaurant in a beautiful garden but way up high is a space frame roof that is coated on the inside with a black matte finished fabric so that it looks like the night sky because it's an evening restaurant in this particular case.

And it's so -- the roof and the sky disappear and you are in an outdoor environment but you don't have to worry about the rain or the wind or the temperature.

And then, the garden begins to morph while you're sitting in it and flowers bloom and fountains come up and go down and the entire environment changes while you are having dinner several times.

That kind of thing is a mixture of public entertainment augmenting in this case a Japanese restaurant or -- in each of our cases, we have done this sort of thing.

In the bus station we have a tremendous bus arrival with the dancing fountain outside.

And the bus arrival, the bus lobby has been taken to another level.

And in it are public entertainment surprises.

There's also an opera house, a proscenium theater that has performance in it.

So almost everywhere you go in this hotel -- and I have just scratched the surface -- this hotel is a bit of a wonderment as far as your experience.

Because I want people to say when they go to South China and they go to Macau that they have to stay in our place because it is such fun.

Another point I would make about this facility, I'm assuming for a minute, Tom, that people on the call care about this.

A lot of the business there is related to high-end junket business.

Right now in downtown Macau, we are smack dab in the middle of everybody.

Lisboa on one side, the MGM on the other side, the Arc on the other and (multiple speakers) Star World.

We are in the center, and we get a certain percentage of our business as the second play.

When someone is unlucky in one place, they will walk across the street and gamble at our place.

That geographic positioning is a factor in our volume.

In Cotai, you don't have pedestrian migration because things are too far apart.

These facilities have huge footprints, lots of parking, driveways and the weather is as I say changeable, in some cases, challenging.

So they don't walk.

They go around by buses and everybody supplies free bus transportation.

So I have to make sure that this place for the junket and high-end customer is so irresistible that it is the first choice, that every junket operator must be in this hotel, that the customers go there first.

I don't really care where they go second.

I prefer they go to one of our places, but I have -- DeRuyter Butler, my design partner and I, we have built a product, designed a product that is so perfectly suited to that marketplace and to do exactly what I just described, force virtually, compel, a softer word, the high-end players to come here first.

And the room product, the public area, the access, the arrivals, the multilevel spaces that are animated, it is a different -- you know, this product would never be built in Las Vegas ever.

It is strictly a product of Macau.

And finally in this long-winded dissertation, I would conclude by saying, we did well with Wynn Macau.

We took the sensibility of the Peninsula in Hong Kong to heart when we designed it.

We had no actual hands-on experience in Macau.

We had after the opening of Wynn, hands-on experience and we designed and built Encore, a very specific kind of facility with amenities that were based upon our insights into our customers to improve the guest experience a la Macau.

Forget about Las Vegas, this was about Macau.

The Cotai project is because of the landmass, because of the room we had and the experience we have gained, the Cotai project takes that evolutionary arc way up high.

And I hope that -- you know, I am maybe talking too much.

I just think it drives greater stability to your client base in return visits.

So I think it is important to talk about.

Just one final question if you wouldn't mind.

What sort of activities are you looking at beyond Cotai?

Any opportunities?

I remember during the election timeframe, I think Harrahs was going around with Gary Lublin talking about Internet gambling.

There has been some recent developments there.

I was just wondering if you might be interested in commenting on that, if there's any interest at Wynn (multiple speakers)

Sure, we've been approached over the past several years by most of the Internet players to want to combine with us and take advantage of our brand, and we finally became convinced sort of hesitantly about Poker Stars because it didn't seem to be any interest in the government to enforce restrictions on the game of poker.

They were enforcing restrictions on people who dealt to sports but not to poker.

So based upon that, we made a very tentative conditional deal that said if the United States government makes poker legal and provides that anybody who's been dealing poker recently is acceptable, and then if that legislation passes in Washington and then if you can get approved by Nevada or New Jersey or whoever is the licensing authority, then we will go into business and split it with you 50-50 and we will call it -- put our name on it.

As you know, Poker Stars, finally the Justice Department decided that if you have been dealing even just poker since they passed the law about credit cards and all that sort of thing, that they have indicted Poker Stars and other players.

So the Justice Department has taken a very strong position that the -- you call (multiple speakers) UIGA, that law that was passed in 2006, that that law included poker even though in California they say it's a game of skill and all that sort of thing.

Now there are a number of companies that approach us that have not violated UIGA and would like to go forward with Wynn as a partner.

I think that there's a very complicated agenda in Washington at the moment concerning the deficit, the global economy and taxation and all kinds of things that are critical.

Everybody knows about that.

Whether the Congress -- the House and the Senate, whether John Boehner and Senator Reed will consider this enough of a priority to take it up and deal with it, the subject of Internet poker seems to be screaming for regulation.

There's a huge business and we see from this publicity that these companies offshore don't care about dealing, they do it anyway.

This reminds the of the Volstead Act during Prohibition.

They said you can't drink beer.

Well, people drank beer anyway.

And poker is about as American as apple pie and you can go on an Internet site called pokerscout.com and see the millions of people playing poker.

They actually counted up, half of them or a third of them are in the United States of America.

It seems to me that almost every congressman and senator has in his constituency people who are breaking the law technically.

That's not a very healthy thing.

So, the situation cries for regulation so that states can get money at a time when they need money and the federal government can get some money at a time when it could use the money.

It seems like an intelligent thing to sit down and regulate it.

But it isn't for me to decide that.

It's for the senators and the representatives to do it.

I have expressed my opinion such as I just have now to Senator Reed who I think agrees with it.

I have talked to various members of Congress trying to find out what they thought of it so that we could then have a program at our Company that conformed to public policy.

The public policy up to now which is no surprise to anybody has been murky and arcane.

Arcane is a good word from the SATs that means mysterious and unfathomable.

Most everything in Washington is mysterious and unfathomable.

We are trying to take out what the hell the public policy is and then we can have a corporate policy.

Well, thanks for your time, great quarter.

Harry Curtis, Nomura Securities.

Steve, I had a quick question about the global Baccarat market and your views on how Vegas fits into that global market now that we've seen an increase in Baccarat capacity globally.

So if we think ahead over the next 12 to 24 months, I was wondering what you thought about how the expanding base of Baccarat customers globally.

Does it continue to lift Baccarat revenues in Las Vegas?

Well, I think it's very important to remember that if a person who is in the resort and casino business wants to have a Baccarat game, the price of admission is very high.

Forget -- and I'm not talking about the (inaudible) concession in Macau or a major strip hotel in Las Vegas that costs billions of dollars.

What I am saying is you need an organization, a very complex organization, in our case it's run by Linda Chen who is on my Board.

You need a complex organization that has representation in all of the Asian markets and the Latin markets and European markets.

You need to be constantly working that market, contacting and maintaining relationships with those customers.

You have to have a sophisticated organization that can make the credit decisions and execute collection appropriately.

This is not a game for children.

Once you create that organizational structure -- and I say it is daunting -- then the first dollar of Baccarat probably cost you $30 million a year.

But then you can open the door to $200 million of it.

So I think the most important thing to remember is that the taking advantage of the Baccarat market for lack of a better term worldwide is a function of extremely sophisticated organization.

There are several here in Las Vegas; certainly the Sands, certainly the folks at MGM with my old hotels, the Bellagio and Caesars I think with Caesars Palace, and of course the operators in Macau.

There are eight of us that do this.

They do okay in London with it, it's a much tinier baby-sized piece of business.

But it is a big leap to get into this business.

You can't just spread a Baccarat table.

These people -- you've got to be prepared to give millions and millions of dollars of credit.

Scott, what's our market bucket like in Las Vegas at the moment?

Scott Peterson, Chief Financial Officer.

This is an interesting little point.

I mean our gross receivables are $175 million.

$175 million in receivables.

What is our reserve for doubtful accounts?

$70 million.

$70 million.

Almost half of it is reserved for doubtful accounts.

Now we put a small percentage of the money away every time we grant a marker.

That is the reserve for doubtful accounts.

In my 40-odd years, we've never missed or underreserved which is to say that in my career with my colleagues, we have been able to issue credit responsibly over decades.

That is a very difficult thing to do and Marc Schorr, Linda Chen, Scott Peterson, Robert Gansmo (multiple speakers)

60% or 61% reserved in Macau.

And we are 61% reserved -- what is the size of the receivables in Macau?

81 (multiple speakers)

$81 million.

And $50 million reserved.

And $50 million reserved because the junket operators that take care of that.

But the point I'm making is that this is a whole big deal to work on this.

And you've got to be totally committed, you've got to have the building, the facility and the staff, the people.

There is the cool things that get the people that know how to do this.

And I hope that -- that tells you where it's going to go.

If the market is to grow, it will be because people have the facilities and the staff to go find the customers, make it easier for customers to come to them.

Next question?

Carlo Santarelli, Wells Fargo.

I think he's gone.

Next one?

Robin Farley, UBS.

Great, thanks.

Just kind of two short-term questions.

In Macau in the quarter, you added about 20 tables since the end of the year.

Did most of those come on early in the quarter, late in the quarter?

And just can you remind us, at this point are you maxed out in terms of your table allocation?

It came on late, Robin.

(inaudible) really a big factor in Macau (multiple speakers)

I'm sorry?

What?

We are up to currently around 499 games which include 11 poker games.

So we're getting close to the table allocation but there is a little room.

And then in Vegas, you talked a lot about obviously the increases in RevPar and food and beverage revenue.

There's been a lot of talk about in the Vegas market in general about a slowing since Q1.

Have you seen a slowing?

Still an increase but just kind of as you look out to the next two or three quarters, and the comps do get tougher in the second half.

Can you give us some color on that?

Matt, you answer that.

So, what we have seen at our end of the market, the luxury end, is the second quarter still feels pretty good.

July is soft which I think you'll hear from all of the other operators.

But the fourth quarter just based on our convention bookings in October in particular also feels pretty good.

So outside of large macro events like gas going to $4.50, we feel pretty good about our position in the market the rest of the year.

This summer will be tough when we go to the automobile people.

But that's you know, July and August.

But the convention business, Robin, starts around the 10th or 15th with some of the fashion and jewelry stuff (multiple speakers) middle of August.

And so we get help, a little relief from the heat and the reliance upon the automobiles.

But you know, we deal around that here.

We can do that in our play.

One more question.

Janet Brashear, Sanford Bernstein.

Shifting back to Macau again, you know, the VIP revenue keeps growing faster than the mass revenues.

I wonder if you could address what your expectations are about that ratio going forward.

Well, you know, we did add capacity so that sort of explains part of it.

I don't know that we have thought about it any more than that.

You know, as long as we -- it takes -- there's several hurdles to become a junket operator at Wynn.

First of all, you have got pass a pretty severe internal investigation process that we installed the day we opened in 2006 and share with the Nevada gaming authorities every quarter.

So that's one hurdle, then the next hurdle is Linda.

Linda puts a big minimum requirement on a junket operator to get tables at our place; big hurdle.

So when we see that there's an opportunity -- and then Linda uses a geographic distribution system.

She tries to have people in different places to represent us so that the customers -- so the operators don't overlap too much.

So those are the factors that determine whether we allow someone else to join us in our marketing and it's hard (multiple speakers)

I'm thinking a little more broadly about the whole market, not just Wynn, but as you look at the whole market, how much mass can grow versus how much VIP can grow in terms of the customer volume and flow to Macau.

Well, I don't want you to think I'm insensitive, but the fact is I don't care.

Can't make any money in the other places, they are on their own.

We keep a very myopic look on our own place.

And we -- from time to time we compare it to the marketplace.

But we are watching our own performance and we make all our decisions on our own tables and our own performance.

So you know, you're asking me a question for which we don't do much homework.

One final question.

Ian gave us the marketshare numbers in Macau based on your fair share calculation.

Does Marilyn have those handy for Las Vegas?

Sure, the table numbers were between -- we are about 2.5 times our fair share on tables and we are at fair share on slots.

Did you hear that?

Yes I did, thank you.

We're about 250% above our fair share.

Thank you very much -- did you have something else ma'am?

No, that's okay.

Thanks, everybody, I hope we didn't cut anybody off that -- Samantha is always available to answer any other questions.

So am I for that matter, and Matt and the rest of us.

Nice talking to you especially when we have a cool quarter, it makes it fun.

Good bye.

Thank you all for participating in today's Wynn Resorts first-quarter 2011 earnings call.

You may now disconnect.